23-930. Unfair claim processing practices; bad
faith; civil penalties
A. The commission has exclusive jurisdiction as prescribed in this section over
complaints involving alleged unfair claim processing practices or bad faith by an
employer, self-insured employer, insurance carrier or claims processing representative
relating to any aspect of this chapter. The commission shall investigate allegations of
unfair claim processing or bad faith either on receiving a complaint or on its own
motion.
B. If the commission finds that unfair claim processing or bad faith has occurred
in the handling of a particular claim, it shall award the claimant, in addition to any
benefits it finds are due and owing, a benefit penalty of twenty-five per cent of the
benefit amount ordered to be paid or five hundred dollars, whichever is more.
C. If the commission finds that an employer, self-insured employer, insurance
carrier or claim processing representative has a history or pattern of repeated unfair
claim processing practices or bad faith, it may impose a civil penalty of up to one
thousand dollars for each violation found. The civil penalty shall be deposited,
pursuant to sections 35-146 and 35-147, in the state general fund.
D. Any party aggrieved by an order of the commission under this section may request
a hearing pursuant to section 23-947. The hearing and decision shall be conducted
pursuant to the provisions of section 23-941.
E. The commission shall adopt by rule a definition of unfair claim processing
practices and bad faith. In adopting a rule under this subsection, the commission shall
consider, among other factors, recognized and approved claim processing practices within
the insurance industry, the commission's own experience in processing workers'
compensation claims and the workers' compensation and insurance laws of this state.
F. This section shall not be construed as limiting or interfering with the
authority of the department of insurance as provided by law to regulate any insurance
carriers, including the jurisdiction of the department of insurance over unfair claim
settlement practices as provided in section 20-461.
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